David: Brennen, Thanks your sharing your insights with us today. Could you share how you got involved with Bitcoin? How did you first hear about it?

Brennen: I’ve been reading about and following Bitcoin from pretty early on. I had a few friends who were mining and talking about it a lot. But it wasn’t until 2013 that I really started digging deep into how Bitcoin worked and where it was heading. I read a post on the Priceonomics Blog that went into the Byzantine Generals problem and did a great job explaining the blockchain. That’s what started me down the rabbit hole.

David: What is Clef?

Brennen: Clef is decentralized two-factor authentication from the future. It’s a better way to log into sites that makes logins safer, and at the same time makes them easier for most users. Clef completely replaces passwords by recognizing a user’s phone instead of anything they remember or type. You can walk up to any computer in the world, hold up your phone, and you’re instantly logged in. The New York Times said logging in was “magical” and about 75,000 sites have already started accepting it.

David: Your talk at Inside Bitcoins Chicago is entitled “Building Trust on the Blockchain”. It reminds me of an article I wrote recently in Techcrunch with a similar name, but I think your approach is quite unique and interesting. Could you share with us what you mean by building trust on the Blockchain?

Brennen: I was on a panel the other day where someone asked us “What is the biggest security issue facing Bitcoin today?” The first panelist said that we needed to teach users how to safely store their private keys and the second said that we needed more people to switch over to multi-signature wallets. When I got the microphone, I said that the biggest security problem is that we expect people to understand what a private key is and to understand the difference between multi-signature wallets. Both of those answers show that to use Bitcoin safely, you have to understand cryptography. As a nation we’re still working to get everyone to understand long division, and as a world we’ve got even further to go, so spreading knowledge about cryptography is an impossible challenge. Instead, we need to build services and mental models that help people wrap their heads around Bitcoin and use it safely without having to understand it. I think ChangeTip is probably doing the best job of this and it’s at the root of how we think about security at Clef.

David: Where do you see opportunity for Bitcoin? What are the first use cases that will gain significant traction?

Brennen: I think that we’ve already seen a lot of good use cases for Bitcoin, but the mental models are still too technical. For instance, I think payment is an amazing use case for Bitcoin, but we’ve gone about explaining it completely wrong. The advantage of Bitcoin payment is that it’s much, much cheaper than the traditional system. The disadvantage is that you can’t use it in many places, it takes a lot of setup, and it’s irreversible so fraud is really damaging and permanent. So I think the payment company that will win will be the one that piggy-backs as much as possible on the old mental models, but then capitalizes on the fee advantage. Imagine if I made a credit card that cost a store 1.9% instead of the 2.3% + $.30 that’s standard today. Then I could tell customers they get 1.6% cash back for every purchase (higher than any other card) and still be making a profit because the processing fees are so low. Now the economics make sense on both sides and there’s a real economic reason for people to accept and use the technology, and they don’t have to understand anything about Bitcoin.

David: What do you see as the biggest challenges for the professionals building new enterprises in the Bitcoin ecosystem?

Brennen: I think the ecosystem still has a lot to prove to the world. The technology is amazing, but that’s only step one. Translating that into something anyone can pick up is the next challenge and a lot of companies are struggling with that today.

David: What’s on the horizon for you? What can we look forward to seeing from Clef?

Brennen: You can expect to see a lot more of us in the Bitcoin and cryptocurrency world. We just launched an integration with AlphaPoint, who power so many of the exchanges, and we have a lot more in the pipeline.

David: Thank you very much for your thoughts, Brennen. I appreciate your time.